Residential Investment Research Articles

Real Estate Market Transformations Amidst Post-Pandemic Sino-U.S. Economic Trends

In the post-pandemic era, the global economic landscape has undergone profound changes. As the world’s largest economies, the economic policies and market performances of the United States and China have exerted far-reaching impacts on the global real estate market. This paper delves into the current state and future trajectory of the real estate market under Sino-U.S. economic trends, focusing on commercial real estate, residential investment, property taxes, financing, and laws and regulations. It also incorporates keywords such as easements, deed transfers, premium discount rates, home mortgages, police powers, liens, common law, fixtures, joint leases, marital property, private property, and trespassing to provide a comprehensive analysis.

Your room is ready: Tourism and urban revival

Tourism is an essential sector of the global economy, contributing significantly to GDP and employment. Despite its importance, our understanding of its impact on urban economic activity remains limited. This paper aims to fill this gap by examining the impact of tourism on urban transformation using a dataset of hotel openings in Madrid from 2001-2010. I show that hotel openings positively impact the number of establishments and employment by using the number of protected buildings as an instrumental variable to account for the non-random distribution of hotel openings. Interestingly, hotel openings contribute to changes in the composition of the economic activities and the business structures, enhancing tourist-oriented corporate-owned businesses over other individual-owned companies. Finally, economic effects extend to the real estate market, increasing rental prices and residential investment.

Government expenditure and the housing puzzle: Unpacking mechanisms

Shocks in housing demand can trigger economic downturns, prompting governments to boost public consumption to mitigate its impact. The literature has found conflicting effects of government spending on residential investment and housing prices. We hypothesize that differences in the construction sector’s responses may be due to factors unaccounted for in the estimations, such as labor supply response to wage changes, labor reallocation between sectors, and the amount of household debt. Using a dynamic general equilibrium model, we demonstrate that government consumption boosts tradable goods production, resulting in increased labor demand and wages. However, this diverts workers away from construction, potentially deepening the wound in this sector. Specific labor market attributes and economic indebtedness can catalyze worker displacement from the construction sector, thus adversely affecting residential investment and overall credit. As a result, borrowers face considerable welfare losses. Redirecting government spending toward housing sustains residential activity while exacerbating the overall welfare decline. Our analysis provides plausible explanations for the disparate empirical evidence on the impact of government spending on the construction sector.

Research on factors influencing housing prices in Beijing

This paper delves into the issue of soaring housing prices in Chinas real estate sector, with a particular focus on Beijing. Employing a multiple linear regression model, it conducts an empirical analysis to identify the factors influencing housing prices. Furthermore, it synthesizes scholarly perspectives to offer a comprehensive discussion on these influencing factors. The research highlights Beijings real estate development, residential investment, and residential sales area as pivotal determinants of housing prices. Building upon these findings, the study advocates for the implementation of effective measures such as land policy regulation and restrictions on real estate transactions to guide the real estate market development prudently and maintain housing prices within a rational range. Results show that real estate development residential investment has a significant positive impact on housing prices, while residential sales area has a significant negative impact. Ultimately, the research endeavors to furnish a scientific foundation for policy formulation and assess its impact, thereby fostering the healthy growth of the real estate market, ensuring stable economic progress, and enhancing the well-being of people.

Reassessing the inversion of the Treasury yield curve as a sign of U.S. recessions: Insights from the housing and credit markets

Is yield curve inversion a reliable recession signal? Prior research on forecasting recessions investigates the role of the slope of the yield curve, housing, banking, and corporate credit spreads in isolation, without fully considering their interconnectedness. Therefore, we conduct a comprehensive investigation into the ability of house prices, residential investment, bank aggregate liquidity creation (LC) and credit (BC), and corporate credit spreads to forecast recessions. For the 1973–2023 sample, after accounting for the slope of the yield curve, our in- and out-of-sample results show that: i) house prices and credit spreads signal recessions—house prices decline, and credit spreads rise ahead of recession quarters; ii) residential investment’s recession forecasting ability is not as robust as house prices; iii) the recession forecasting ability of LC or BC diminishes when we include other indicators. These findings provide important insights into the interconnectedness among economic indicators and their relationship with recessions. Importantly, we demonstrate that the inversion of the yield curve alone is not the surest sign of a recession. For a recession to occur, house prices must decline, and corporate credit spreads must significantly increase.

The return on everything and the business cycle in production economies

Motivated by recent empirical evidence on returns on equity, bonds, and housing, we study interactions among an economy’s total net worth, consisting of housing and equity, the business cycle, and three specific types of productivity risk: standard, long-run, and disaster. Preferences include habits or follow a generalized recursive form. Procyclical housing adjustments reduce consumption risk as residential investment determines the next-period amount of housing as a fraction of the composite consumption good. The existence of an asset that is safe in real terms and has a positive supply prevents versions with habits or long-run risk from simultaneously replicating risk premia, investment volatility, and housing demand. The disaster risk version replicates these targets. In all versions, a perfectly negative correlation between equity returns and the marginal utility of consumption places the equity Sharpe ratios in the upper bound of any Sharpe ratios (the Hansen–Jagannathan bound). Consequently, replicating Sharpe ratios of housing larger than equity is impossible.

Regulating Roof-Top Solar Generation: Defending Sustainable Projects from Utility Proposals

Residential owned solar panels mounted on roof-tops generated 1.4% of the U.S. electricity supply in 2022. Utilities compensate residential customers using a net metering system by which each kilowatt-hour generated by the customer reduces the customer’s bill by the amount the utility charges for one kilowatt. Despite the small impact of roof-top solar on the total market, in 2022, thirty-two states conducted ninety-four proceedings investigating whether to change the net metering system. In these proceedings, utilities advocated changing the rates to discourage residential investment in solar panels. Utilities argue that net metering provides a subsidy to solar customers because the rate the utility pays is greater than the avoided cost of energy. That excess payment allows solar customers to avoid paying for the distribution network. The cost of the distribution network is shifted to non-solar customers. This article will evaluate these claims. It will show that if the social cost of carbon were in the calculation, it would generate a Kapp cost shift from solar customers to non-solar customers. The size of the Kapp cost shift is greater than the cost of distribution networks, reversing any private cost shift that utilities have estimated.

Financial frictions in a macroeconometric model: A counterfactual analysis for the case of Slovenia

The paper investigates the importance of modelling the effects of financial frictions in a macroeconometric framework for the small open economy of Slovenia. We enhance the model with additional behavioural equations pertaining to business and residential investment, the respective lending rates, and the gross operating surplus of non-financial companies. The estimation period spans from 1999Q1 to 2019Q4, meaning a period of significant financial distress was included in the analysis. Counterfactual analysis was conducted by comparing simulation results from a macroeconometric model with the explicit modelling of financial frictions to a model with limited transmission effects. The results indicate that financial frictions significantly hinder macroeconomic development under adverse macroeconomic scenarios. Policymakers’ measures should focus on maintaining financial sector stability and enabling external financing access for non-financial companies and households during adverse economic situations.

Analysis of Environmentally Certified Residential Developments in Poland

Abstract The scale of environmental pressure caused by the construction sector has prompted a search for new technical solutions to minimize the negative impact of this part of the national economy on the environment. The drive to evaluate the adopted solutions has led to the creation of building assessment systems - environmental certificates. The aim of the article is both to introduce the certification processes used in the Polish residential property market and to indicate the locations of residential investments that have obtained the certificates in question. The paper takes a closer look at environmental certification using multi-criteria building assessment systems, i.e. BREEAM, LEED and HQE. The time scope of the presented research covered the years 2016 to the first quarter of 2022. The research carried out allowed an upward trend to be observed in the number of environmental certificates awarded, indicating the use of green building principles for residential properties. It is certain that there has been a development of this type of investment in Poland in the recent years. An analysis of the spatial distribution of the surveyed investments shows that location clusters have formed - green (low-emission) residential investments are distributed in the largest cities in Poland, which are characterized by a strictly defined consumer profile.

Assessing the effect of housing attributes and green certification on Malaysian house price

Purpose Sustainability represents innovative elements in determining the profitability of real estate investments, among other factors, including the green component in real estate. Evidence from the literature has pointed out that incorporating green features into residential buildings can reduce operational costs and increase the building’s value. Although green real estate is considered the future trend of choice, it is still being determined whether prospective buyers are willing to accept the extra cost of green residential investment. Therefore, this study aims to investigate the effect of housing attributes and green certification on residential real estate prices. Design/methodology/approach The impact of the housing attribute and green certification in the residential sectors was assessed using a transaction data set comprising approximately 861 residential units sold in Selangor, Malaysia, between 2014 and 2022. Linear and quantile regression were used in this study by using SPSS software for a robust result. Findings The findings indicate that the market price of residential properties in Malaysia is influenced by housing attributes, transaction types and Green Building Index certification. The empirical evidence from this study suggests that green certification significantly affects the sales price of residential properties in Malaysia. The findings of this research will help investors identify measurable factors that affect the transaction prices of green-certified residential real estate. These identifications will facilitate the development of strategic plans aimed at achieving sustainable rates of return in the sustainable residential real estate market. Practical implications Specifically, this research will contribute to achieving area 4 of the 11th Malaysia Plan, which pertains to pursuing green growth for sustainability and resilience. This will be achieved by enhancing awareness among investors and homebuyers regarding the importance of green residential buildings in contributing to the environment, the economy and society. Originality/value The regression model for housing attributes and green certification on house price developed in this study could offer valuable benefits to support and advance Malaysia in realising its medium and long-term goals for green technology.

Analyzing accessibility to urban services for new residential buildings. A case study of Craiova city

The present study uses methods based on Geographic Information System (GIS) to investigate the distribution of new residential buildings in Craiova (Romania) and assess their accessibility to key urban services. The focus is on collective housing developments constructed after 2015, encompassing both completed and ongoing projects. The research evaluates accessibility at the neighborhood level, considering key facilities and services such as banking services, pharmacies, kindergartens, primary schools, supermarkets, sport facilities, and green urban areas. Data for urban services were collected from opensource databases (OpenStreetMap, Copernicus Land Monitoring?Urban Atlas) and completed by field investigations. Isochrones, representing travel time from each residential building to the selected services, are used to measure the residents' accessibility by multiple travel modes. Additionally, the study considers the proximity of new residential buildings to the old historical city center, as a hub for shopping and leisure activities, and the walkability of the neighborhoods where the collective residences are located. The findings shed light on the spatial distribution of new residential developments in relation to essential urban services, providing valuable insights for urban planning and development strategies in Craiova, as well as for future residential investments.

Evaluation of the Performance of Residential Property Investments in Minna, Niger State, Nigeria

This study evaluated the performance of residential property investments in Minna, Niger State, Nigeria. Data for the study were collected through field survey from estate surveying and valuation firms which are active in the residential property market in Minna. Thus, a total of 382 residential investment properties were selected from the property portfolio of estate surveying and valuation firms in the city for the study. Variables utilised for the study include the capital value, annual expenses in form of taxes, rates, repairs etc. and annual rental value of 1-BR, 2-BR and 3-BR apartments for the period, 2009 – 2021 and analysed using analysis of variance, geometric mean and coefficient of variation. The findings indicate that the variance in total return for all residential investment property types across all the study locations is statistically significant, also the risk associated with this return varies according to the residential property investment types across all the locations considered in the study. The study recommends that prudent residential real estate investors in the city require impeccable pre-investment appraisal of residential property investments at all locations in the city before investing their capital, particularly if they are risk averse.

Growth, cycles, and residential investment

The empirical literature on models of cyclical growth and distribution has not investigated the differential roles of residential vs. nonresidential investment. These flows are similar in that they are largely undertaken by profit-seeking corporations, but differ greatly in that residential (nonresidential) investment is a leading (lagging) indicator of the business cycle. We estimate two Structural Vector Autoregressive (SVAR) models of the cyclical components of US post-WWII time series with restrictions motivated by neo-Goodwinian theory. The 4D model includes utilization rate, accumulation rate, employment rate and labor share. The 5D model disaggregates investment into residential and nonresidential flows. Results (i) support profit-led demand and profit- squeeze distribution, and (ii) confirm that residential investment leads the cycle, whereas nonresidential investment lags it.

Investification in the housing market: exploratory study in Santiago de Chile

This study uses a quantitative methodological approach with geographically weighted regressions to address the phenomenon of investification in the Greater Santiago rental market. Using the collection and analysis of transaction data and urban indicators, the location patterns of residential investments are explored for specific urban functions at the census tract level. The analysis reveals that proximity to higher education institutions, stability in rental prices, and the presence of older adults are determining factors in the selection of investment properties. These findings evidence the transformation of the urban landscape as rental spaces for capital and highlight the growing socio-spatial segmentation, thus underlining the need for regulations that address the implications of investification in the urban dynamics of Greater Santiago.

Quality of multifamily residential land as a factor supporting sustainable urban development

The analysis of the real estate market is one of the basic tasks of a real estate valuer. Proper analysis should be preceded by determining the spatial extent of the market. It is most often assumed that comparative properties should be located on the local market, usually seen as the market of a given town or commune. In contrast, in the absence of local market transactions, the analyzed area is extended to the regional, national and, in specific cases, even international markets. The purpose of the article is to define the boundaries of the local market in the example of the city of Poznań (Poland). The market research was mainly based on statistical analysis. The results of the conducted research show that in the case of undeveloped land for multifamily housing in Poznań, the local market should be narrowed to specific city zones, not treating the city area uniformly. Additionally, it should be noted that investors make decisions about the location of residential investments, considering land prices and real estate development opportunities, which vary in different parts of the city. The quality of life of residents and the degree of sustainable development of the city that can be achieved depend on the developers' decisions on the choice of location, as well as on the spatial and technical solutions used.

The impact of negative gearing on the investment decisions of housing investors: the case of Greater Sydney

AbstractTo date, no empirical study has examined the impact of negative gearing and other factors on residential investors’ decisions using quantitative analysis. We applied a structural vector autoregression framework to trace the response of residential investors in Greater Sydney to shocks in its key drivers over the period 1991–2018. We discovered a residential investors’ profile in which negative gearing is being used to cushion any net rental loss during periods of low yield while expecting capital growth over their holding period. This supports the hypotheses of the study which posit that capital gains and negative gearing have a positive and negative relationship, respectively, with the number of residential investors. Additionally, a negative relationship between mortgage lending rate and number of investors is found, indicating a rising lending rate will increase expenses and contribute to low yield. We also found population growth and increased housing supply could increase the number of residential investors. These results could be used by tax and housing policy makers to recalibrate tax laws relating to negative gearing, especially for residential investment. Residential investors could potentially use this information for more informed decision making, particularly during periods of low yields.

The Impact of the COVID-19 Pandemic on Investment Management in the Housing Market in Turkey

COVID-19 significantly impacted the management of investments in the residential property market. Changes in property demand, shifts in market volatility, financing challenges, changes in property management and changes in local regulations and policies are presented. The pandemic created a more challenging and unpredictable investment management (IM) environment in the residential property market. However, with proper knowledge management (KM) and investment strategies, investors may have opportunities to thrive in this changing market. Investment KM refers to identifying, capturing, organising and sharing information and expertise related to investment activities within an organisation. KM in residential investment involves developing a system for gathering, organising and using information and expertise related to buying, owning, and selling a property. COVID-19 significantly affected the property market. Effective KM in residential investment can help individuals make informed decisions, identify potential risks, and maximise the value of their investment. Like many others worldwide, the Turkish residential market was hit by COVID-19. The Turkish residential market has a few key points: financing, shifts in buyer preferences, and regulation changes. The pandemic hit Turkey's residential property market, leading to property price changes. The Turkish government implemented several residential policies to support the residential market and help individuals and families facing financial challenges due to the pandemic. Those policies did not eliminate the challenges but mitigated some of the negative effects of the pandemic on the market and helped individual investors. This article discusses house price changes in Turkey during the COVID-19 period, the factors affecting price changes, and the property policies that affect property price changes. This article analyses IM challenges and explores how KM can help individual property investors.

Development of the Methodology for Residential Investment Management During the Covid-19 Pandemic

Investing in residential property is a good investment instrument for individuals. The benefit of investing in a residential property is the potential for long-term appreciation in value. Historically, property values have increased over time, providing a solid return on investment for those who hold onto their properties for a significant amount; property provides a source of passive income through rental income. Investing in property is an attractive investment opportunity in emerging markets. Turkey is considered an emerging market. Like many emerging markets, it faces several economic and political challenges, including high inflation, a large current account deficit, and political instability. Investing in property in emerging markets also comes with certain risks, including currency fluctuations, political instability, and uncertain legal and regulatory environments. During the SARS outbreak, the property market in Hong Kong was significantly affected. The Spanish flu pandemic had a significant impact on the property market. During the 19th-century cholera pandemics, there were instances of substantial disruption to property markets. The COVID-19 had significant impacts on the residential market. Developing a methodology for individuals to use for their residential investment can be challenging, as it requires consideration of various factors. There are a variety of resources available for individuals who are interested in learning more about investing in property, and people are able to educate themselves in the field of property investment. In this study, we examined individuals' residential property investments in Turkey during COVID-19, and the factors that influenced their investments. We examined whether individuals' consideration of a single advantage in residential investments provides them with financial benefits. We examined the parameters that residential investors can follow to achieve success with their investments.

Forecasting Economic Growth: Evidence from housing, banking, and credit conditions

Previous studies on economic growth have separately examined the role of housing, banking, and credit market conditions, despite their interrelatedness. Therefore, this paper comprehensively investigates the relative importance of four indicators [house prices, residential investment, corporate credit spreads, and aggregate bank liquidity creation (LC)] to forecast U.S. real GDP growth. We do so after accounting for a comprehensive set of other predictors and aim to identify indicators that better forecast economic growth. Our in-and out-of-sample results show that house prices and corporate credit spreads predict real GDP growth better than residential investment and LC. Moreover, shocks to house prices and corporate credit spreads have a greater impact on real GDP growth and other macroeconomic indicators than shocks to LC and residential investment. Furthermore, house prices have the largest positive impact on inflation and the largest negative effect on unemployment. These results may have potential monetary policy implications.

The Role of Marketing on the Success of Residential Investment Projects in Baghdad

The Role of Marketing on the Success of Residential Investment Projects in Baghdad